American pro boxer Floyd Mayweather and music producer DJ Khaled are in some hot water with the SEC for promoting cryptocurrencies without disclosing their promotional relationship with the companies, a new report says.
According to CNN, both Mayweather and DJ Khaled, real name Khaled bin Abdul Khaled, failed to disclose that they were being monetarily compensated for advertising several different cryptocurrency companies, one of which being Centra Tech.
The U.S. Securities And Exchange Commission alleges that Mayweather received $300,000 from three separate cryptocurrency companies, including $100,000 from Centra Tech. DJ Khaled also received $50,000 from Centra Tech. (DJ Khaled Makes Insane Jet Sky Rescue In Miami. Watch It Here)
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In a settlement with the SEC, both men agreed to pay back the payments they received to the Commission, as well as a penalty with interest. Mayweather also promised not to promote any securities for three years, and Khaled will promise the same for two years.
Centra Tech has been charged separately on fraud allegations by the SEC. Neither Khaled nor Mayweather has addressed the matter directly.
Steve Peikin, the director of the SEC enforcement division, said:
With no disclosure about the payments, Mayweather and Khaled’s ICO [Initial Coin Offering] promotions may have appeared to be unbiased, rather than paid endorsements. Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds.
Since cryptocurrency is a relatively new technology, the SEC has found it harder to regulate. This the the first SEC case brought against individuals for allegedly dishonestly promoting cryptocurrencies.